FCC plans 3G spectrum auction

WASHINGTON, D.C. – The Federal Communications Commission is planning to auction more spectrum to aid in the rollout of 3G wireless services.

Wireless service providers, especially in populated metropolitan areas, need additional spectrum to support the higher speeds that 3G services promise. The FCC says it has allocated 90 MHz of wireless spectrum in the 1710-MHz to 1755-MHz and the 2110-MHz to 2155-MHz bands.

True 3G wireless services offer users data transmission speeds at 128K bit/sec to 384K bit/sec for mobile devices and up to 2M bit/sec for fixed-wireless devices. The fastest 2.5G services today support data transmission speeds between 40K bit/sec to 60K bit/sec.

The federal government and wireless cable service providers are using some bands the FCC will auction off. But the FCC says it plans to relocate those licensees. When those users will be relocated is a key question that must be answered before an auction, says Roger Entner, analyst at The Yankee Group.

The FCC says it will announce its auction rules next year with an eye toward conducting the auction in 2004.

“Like Yogi Berra said, ‘It’s like déjà vu all over again,'” Entner says, referring to the aftermath of the Nextwave reauction disaster, where several of the largest wireless service providers bid billions on spectrum the FCC actually didn’t have in hand.

After Nextwave filed for bankruptcy, the FCC “repossessed” its spectrum licenses because of nonpayment. The FCC then auctioned off the licenses to carriers including Cingular Wireless, Verizon Wireless and T-Mobile, formerly VoiceStream, for $16.7 billion. An appellate court nullified the auction in 2001. But these carriers just received a reprieve from the FCC in September for money due for these licenses even as the FCC tries to have the case heard by a higher court (ww.nwfusion.com, DocFinder: 3135).

To avoid the same mess, the “federal government should only auction spectrum when it is clean, in its hands,” Entner says. It’s possible that federal and cable spectrum owners will have until 2007 to move to new wireless bands. If that happens wireless service providers will bid far less for these licenses than if they were buying them without “squatters,” he says.

However, industry experts say the FCC’s announcement is a move in the right direction.

“We are very pleased to see the commission moving ahead with the allocation of additional spectrum,” says Tom Wheeler, CEO of the Cellular Telecommunications & Internet Association.

Entner says some carriers are in need of more spectrum to roll out enhanced services in the near term, even those considered to be 2.5G. Cingular and AT&T Wireless require more spectrum in the most populated areas such as New York and Los Angeles, he says. Carriers such as Verizon Wireless and Sprint PCS typically have enough spectrum for 2.5G services based on the wireless network technology 1xRTT. But to support full-blown 3G, all the carriers require additional spectrum to meet future demands, he says. n